Defence and aerospace giant Northrop Grumman has sold US$600m of 3.85% unsecured senior notes due 2045. Deutsche Bank, JP Morgan, BofA Merrill Lynch, Mizuho and Mitsubishi UFJ are serving as joint bookrunners on the offering, which priced at…
Defence and aerospace giant Northrop Grumman has sold US$600m of 3.85% unsecured senior notes due 2045.
Deutsche Bank, JP Morgan, BofA Merrill Lynch, Mizuho and Mitsubishi UFJ are serving as joint bookrunners on the offering, which priced at 99.973.
The majority of the proceeds, US$500m, will be contributed to the company’s pension plan with the remainder used for debt repayments and potential short term investments.
Fitch rated the notes BBB+ and in a memo to investors noted the hole in the company’s pension pot. At the end of 2014, Northrop had a pension deficit of US$5.5bn, up from US$1.9bn the previous year. The ratings agency attributed the year-on-year deterioration to adverse movement in interest rates, and to new mortality tables released by the Society of Actuaries in 2014. Nevertheless, Fitch said Northrop’s rating was stable.
The issuance marks Northrop’s first bond since May 2013, when it launched a triple tranche offering totalling US$2.85bn.
The Virginia, US-based group declared total long-term debt of US$5.9bn as of 31 December 2014.